W35: Olive & Olive Oil Update

In W35 in the olive and olive oil landscape, according to the International Olive Council, in the 2022/23 season, the global production of olive oil significantly declined to a six-year low of 2.73 million metric tons (mmt) due to severe drought conditions in major producing countries, particularly Spain, Italy, and Greece which saw substantial drops compared to the 2021/22 season. As a result, the European Union (EU) may only produce 1.3 mmt to 1.45 mmt of olive oil for the 2022/23 season, well below the five-year average of 2.1 mmt.

The drought-induced shortage in Spain led to record-high olive oil prices, causing supermarkets to offer short-term promotions to mitigate the impact. Prices for the first cold-pressed extra virgin olive oil from Andalusia surged by 115% in 2023, reaching USD 8.79/liter from USD 4.11/liter two years earlier. Concerns are growing that prices could further escalate to USD 12.86 per liter in 2024 if the drought continues. Spain's olive oil stocks also experienced a significant decline of 73 to 75 thousand metric tons (mt) in Jul-23, leaving approximately 151 thousand mt. If this rate of stock reduction persists, there may not be enough reserves to last until the start of the new harvest season in Oct-23.

In Seville, Spain, the olive harvest for 2023 is projected to yield between 180 thousand mt to 200 thousand mt of olives, significantly lower than the previous year's harvest forecast of 320 thousand mt to 380 thousand mt. This decline is primarily attributed to a lack of rainfall, although the situation could improve if rain occurs. The Aljarafe region has been particularly affected, with high temperatures in Apr-23 and May-23 causing significant damage to the olive trees. The harvest will begin with the Gordal variety, mainly in Utrera and Dos Hermanas, followed by the Manzanilla variety.

In Jaén, Spain, the Cooperativas Agro-alimentarias de Jaén predicts that the domestic agricultural sector will face a shortfall of USD 1.07 billion in the upcoming season due to the significantly reduced olive harvest estimate. This decline is expected to result in a loss of USD 160.78 million in wages during the harvest campaign. With wage reductions occurring for the second consecutive year, there is a growing concern that young individuals may leave Jaén in search of employment opportunities in other sectors.

In Greece, the wholesale price of a liter of olive oil doubled in 2023, rising from USD 4.82/liter to USD 8.57/liter, reaching a price level not seen since 1996. This is similar to the price situation in Spain. Furthermore, on the international market, olive oil prices have surged from USD 6,200/mt to a current rate of around USD 8,500/mt.

The president of the Brazilian Institute of Olive Culture (Ibraoliva) expressed concerns about food fraud in the olive oil industry, particularly regarding imported olive oils from European countries such as Spain, Portugal, and Italy. These oils, often labeled as extra virgin, frequently fail to meet the criteria for this classification as they may exhibit issues like rancidity and a lack of aroma and flavor, deceiving consumers and constituting fraudulent practices.